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Mortgage questions

Does anybody know what you have to qualify for to hold a loan on two homes with the thought of renting the one? We currently have enough to carry both houses on 30-year notes without much problem, but would obviously hope to have it rented right away. Several Realtors that I've spoke with say that houses around here rent very fast, and our neighbor is renting his out.

Re: Mortgage questions

If you need the rent money to qualify for the 2nd house I think you need to show 6 or 12 months rental history. Also I don't think you can carry 2 primary home loans. 1 would have to be a 2nd home or investment property which means a higher rate.

Re: Mortgage questions

We can afford both notes, so we should qualify without having a renter lined up? I did forget about the higher rate on the investment property. We would move out of the current primary residence and rent it eventually.

Re: Mortgage questions

Now that I think about it if both homes are in the same town they will probably make one be in investment home. All my comments are in regards to if the bank is selling the loan to one of the agencies. If bank or Credit Union are going to keep the loan on their books then they can probably do whatever they want.

Re: Mortgage questions

Originally Posted by stateofmind

Does anybody know what you have to qualify for to hold a loan on two homes with the thought of renting the one? We currently have enough to carry both houses on 30-year notes without much problem, but would obviously hope to have it rented right away. Several Realtors that I've spoke with say that houses around here rent very fast, and our neighbor is renting his out.

I've been doing this for almost 3 years now and IIRC there wasn't a whole lot to it. The lender just wanted to make sure we could make both mortgage payments if we had too. BTW, I'd try to rent it out as long as you can (if your property is in a desirable location.)

It's an unbelievable investment right now, our rental has been a major major investment win for us so far after only a few years. Rent covers mortgage, association dues and still puts a little in my pocket. Was even able to refi down to a 15 year over a year ago and the payment only went up around $50.

TBH, if I had the cash I'd buy more.

Edit. Also, you will have to declare the rental as investment property but rates are so low it shouldn't make much of a difference. Our rental is a little under 4% APR IIRC. We were able to refinance using the HARP program.

Re: Mortgage questions

Originally Posted by The_Architect

I've been doing this for almost 3 years now and IIRC there wasn't a whole lot to it. The lender just wanted to make sure we could make both mortgage payments if we had too. BTW, I'd try to rent it out as long as you can (if your property is in a desirable location.)

It's an unbelievable investment right now, our rental has been a major major investment win for us so far after only a few years. Rent covers mortgage, association dues and still puts a little in my pocket. Was even able to refi down to a 15 year over a year ago and the payment only went up around $50.

TBH, if I had the cash I'd buy more.

Edit. Also, you will have to declare the rental as investment property but rates are so low it shouldn't make much of a difference. Our rental is a little under 4% APR IIRC. We were able to refinance using the HARP program.

He wld have to refi his current house as an investment property and the house he purchases wld be his primary, correct? I guess the house he purchases cld be the investment but since he will live in that one i doubt he wants to commit mortgage fraud.

Re: Mortgage questions

Originally Posted by stateofmind

We can afford both notes, so we should qualify without having a renter lined up? I did forget about the higher rate on the investment property. We would move out of the current primary residence and rent it eventually.

If the house that you are going to rent is currently your primary residence, then there is no higher rate, you just keep the loan and the rate that you currently have. Then I assume you would just purchase your new home and future primary residence when you're ready to buy. To qualify, assuming that you're looking at a conventional mortgage, the lender is going to take the minimum monthly payments on all of your debt that repots to your credit report, will include the new and old mortgage (And include taxes and insurance on both houses) and take that monthly payment, divided by your monthly income. If that number is less than 45% than you're good to go. Also you're going to need to show assets, enough to cover not only your down payment, but on top of that you're going to need to take what your new mortgage payment is going to be and multiply that times 6. So if your payment is $1000, you'll need to show $6000 in assets on top of your down payment to qualify for having 2 mortgages. (The 6 months of reserves does not need to be liquid assets, so a retirement statement would take care of that)

Re: Mortgage questions

Originally Posted by CycloneDaddy

He wld have to refi his current house as an investment property and the house he purchases wld be his primary, correct? I guess the house he purchases cld be the investment but since he will live in that one i doubt he wants to commit mortgage fraud.

No he definitely does not need to refinance the investment property. Technically he is "supposed" to declare it as a rental, but efff that. As long as you make your payments, no one will ever know. Once you buy the new house, call them and give them a new mailing address for your bills, etc.... You can tell them: Your kids live in the house or it's a 2nd home, or a million other things.

Re: Mortgage questions

Originally Posted by CycloneDaddy

He wld have to refi his current house as an investment property and the house he purchases wld be his primary, correct? I guess the house he purchases cld be the investment but since he will live in that one i doubt he wants to commit mortgage fraud.

Well plus the house that we are moving to is more expensive, so I don't want higher interest on the larger note.

Re: Mortgage questions

Originally Posted by Cyclonesince78

No he definitely does not need to refinance the investment property. Technically he is "supposed" to declare it as a rental, but efff that. As long as you make your payments, no one will ever know. Once you buy the new house, call them and give them a new mailing address for your bills, etc.... You can tell them: Your kids live in the house or it's a 2nd home, or a million other things.

Probably won't pass as a 2nd home as they are located in the same town.

Re: Mortgage questions

Originally Posted by The_Architect

I've been doing this for almost 3 years now and IIRC there wasn't a whole lot to it. The lender just wanted to make sure we could make both mortgage payments if we had too. BTW, I'd try to rent it out as long as you can (if your property is in a desirable location.)

It's an unbelievable investment right now, our rental has been a major major investment win for us so far after only a few years. Rent covers mortgage, association dues and still puts a little in my pocket. Was even able to refi down to a 15 year over a year ago and the payment only went up around $50.

TBH, if I had the cash I'd buy more.

Edit. Also, you will have to declare the rental as investment property but rates are so low it shouldn't make much of a difference. Our rental is a little under 4% APR IIRC. We were able to refinance using the HARP program.

We went through this about a year ago. The lender for our 2nd home, (the one we currently live in) just told us to indicate at the time of the purchase that we were planning on selling our first home. He said we didn't actually have to sell it, but indicating that we were trying at the time of the new purchase was necessary. A year later, we still own both homes, and yes the rental market is booming right now.

Re: Mortgage questions

Originally Posted by Mr Janny

We went through this about a year ago. The lender for our 2nd home, (the one we currently live in) just told us to indicate at the time of the purchase that we were planning on selling our first home. He said we didn't actually have to sell it, but indicating that we were trying at the time of the new purchase was necessary. A year later, we still own both homes, and yes the rental market is booming right now.

Good to know old fashioned misrepresentation is alive and well in the mortgage industry.

Re: Mortgage questions

Originally Posted by CycloneDaddy

Probably won't pass as a 2nd home as they are located in the same town.

It wouldn't if he was purchasing another home, but on the mortgage that he currently has he'll need to switch is mailing address so it doesn't really matter what excuse he gives them, 2nd home would work. Or like another poster mentioned his wife might snore like a M-F'er

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